SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-5034
CORE INDUSTRIES INC
(Exact name of registrant as specified in its charter)
Nevada 38-1052434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 2000, Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 642-3400
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Common Stock outstanding at December 31, 1993 - 9,799,398 shares.
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
First Quarter Ended November 30
-------------------------------
1993 1992
----------- -----------
Net sales $54,008,000 $46,084,000
Cost of sales, exclusive of
depreciation and amortization $38,288,000 $31,537,000
Depreciation and amortization 1,266,000 1,307,000
Selling, general and
administrative expenses 10,224,000 9,507,000
Interest expense 1,142,000 1,380,000
Other income (1,530,000) (213,000)
----------- -----------
$49,390,000 $43,518,000
----------- -----------
Earnings before taxes on income $4,618,000 $2,566,000
Taxes on income 1,710,000 940,000
----------- -----------
Net earnings $2,908,000 $1,626,000
Net earnings per share $.30 $.17
Dividends per share $.06 $.06
Average shares of stock outstanding 9,798,000 9,775,000
<FN>
See notes to financial statements
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CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
Nov. 30, 1993
(Unaudited) Aug. 31, 1993
------------- -------------
CURRENT ASSETS:
Cash and short-term investments $ 10,152,000 $ 651,000
Accounts receivable, less collection
allowances of $950,000 in November
and $970,000 in August 44,830,000 50,558,000
Inventories 50,512,000 54,092,000
Prepaid expenses 746,000 1,337,000
Deferred taxes on income 2,517,000 2,776,000
------------ ------------
TOTAL CURRENT ASSETS $108,757,000 $109,414,000
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $ 1,197,000 $ 1,374,000
Buildings 17,013,000 18,672,000
Machinery and equipment 49,361,000 50,145,000
------------ ------------
Total $ 67,571,000 $ 70,191,000
Less accumulated depreciation 40,284,000 41,304,000
TOTAL PROPERTY, PLANT AND ------------ ------------
EQUIPMENT $ 27,287,000 $ 28,887,000
OTHER ASSETS:
Excess of cost over net assets
of companies acquired $ 7,072,000 $ 7,269,000
Investment in real estate partnership 1,603,000 1,432,000
Miscellaneous intangibles 4,655,000 4,275,000
------------ ------------
TOTAL OTHER ASSETS $ 13,330,000 $ 12,976,000
TOTAL ASSETS $149,374,000 $151,277,000
<FN>
See notes to financial statements
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LIABILITIES & STOCKHOLDERS' EQUITY
Nov. 30, 1993
(Unaudited) Aug. 31, 1993
------------- -------------
CURRENT LIABILITIES:
Notes payable to bank - $ 900,000
Accounts payable 10,723,000 12,521,000
Accrued payroll and other expenses 10,409,000 12,899,000
Dividends payable 588,000 587,000
Taxes on income 1,088,000 -
Long-term debt due within one year 1,500,000 1,500,000
------------ ------------
TOTAL CURRENT LIABILITIES $ 24,308,000 $ 28,407,000
LONG-TERM DEBT,
less amount due within one year 47,132,000 47,134,000
DEFERRED TAXES ON INCOME 1,880,000 1,580,000
ACCRUED EMPLOYEE BENEFITS 2,761,000 3,190,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1:
Authorized - 100,000 shares
Issued - none
Common stock, par value $1:
Authorized - 20,000,000 shares
Issued - 11,209,558 shares $ 11,210,000 $ 11,208,000
Additional paid-in capital 734,000 728,000
Retained earnings 67,691,000 65,372,000
Cumulative translation adjustments 356,000 356,000
Treasury stock (1,410,160 shares) (6,698,000) (6,698,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 73,293,000 $ 70,966,000
------------ ------------
LIAB. & STOCKHOLDERS EQUITY $149,374,000 $151,277,000
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CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Quarter Ended November 30
------------ ------------
1993 1992
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,908,000 $ 1,626,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation $ 1,196,000 $ 1,232,000
Amortization 70,000 75,000
Gain on sale of division (915,000) -
(Increase) decrease in assets:
Accounts receivable 4,472,000 2,461,000
Inventories 708,000 (796,000)
Prepaid expenses 515,000 332,000
Taxes on income 667,000 427,000
Deferred taxes on income 420,000 456,000
Increase (decrease) in liabilities:
Accounts payable (3,025,000) (489,000)
Accrued payroll and other expenses (1,077,000) (1,692,000)
------------ ------------
TOTAL ADJUSTMENTS $ 3,031,000 $ 2,006,000
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 5,939,000 $ 3,632,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($948,000) ($950,000)
Proceeds from sale of division 5,898,000 -
Proceeds from discontinued operations - 7,062,000
Other 99,000 (61,000)
------------ ------------
NET CASH FROM INVESTING ACTIVITIES $ 5,049,000 $ 6,051,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on short-term bank loans ($900,000) ($9,700,000)
Cash dividends paid (587,000) (587,000)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES ($1,487,000) ($10,287,000)
------------ -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 9,501,000 (604,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 651,000 1,917,000
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 10,152,000 $ 1,313,000
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 1,588,000 $ 1,741,000
Income taxes paid $ 47,000 $ 18,000
<FN>
See notes to financial statements
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CORE INDUSTRIES INC AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A
The accompanying consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the information presented therein.
NOTE B
Reference is made to the Company's Annual Report on Form 10-K for the
year ended August 31, 1993, for a description of accounting policies and other
detailed footnote information.
NOTE C - Inventories
November 30, August 31,
1993 1993
Raw materials and supplies $ 27,456,000 $ 26,762,000
Work in process 11,559,000 13,417,000
Finished goods 11,497,000 13,913,000
------------ ------------
$ 50,512,000 $ 54,092,000
NOTE D - Sale of Division
On September 23, 1993, the Company sold one of its farm equipment
divisions, Du-Al Manufacturing Company, for a pretax gain of $1,475,000 (total
of $.09 per share). Du-Al represented approximately 4% of the Company's total
1993 sales and approximately 4% of the Company's assets as of August 31, 1993.
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NOTE E - Product Segment Information
The Company classifies its products and services into three general
segments. Financial information by segment is summarized below.
Earnings(Loss)
Before
Net Sales Income Taxes
First quarter ended November 30, 1993:
Electronics $ 25,469,000 $ 1,674,000
Farm equipment 8,811,000 2,635,000(1)
Fluid controls and
construction products 19,728,000 2,361,000
Corporate unallocated - (910,000)
Interest expense - (1,142,000)
------------ ------------
Total $ 54,008,000 $ 4,618,000
First quarter ended November 30, 1992:
Electronics $ 19,543,000 $ 1,465,000
Farm equipment 9,619,000 1,301,000
Fluid controls and
construction products 16,922,000 2,007,000
Corporate unallocated - (827,000)
Interest expense - (1,380,000)
------------ ------------
Total $ 46,084,000 $ 2,566,000
<F1>
(1)Includes pretax gain of $1,475,000 (total of $.09 per share) related to the
sale of Core's Du-Al Division.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net earnings for the first quarter of fiscal 1994 were $2,908,000, or
$.30 per share, on sales of $54,008,000. Last year's net earnings for the
first quarter were $1,626,000, or $.17 per share, on sales of $46,084,000.
Included in this year's first quarter results was a net favorable $.09 per
share related to the sale of the Company's Du-Al division; excluding this
gain, net earnings were up $.04 per share or 24%.
In the first quarter of fiscal 1994, the Company's Electronics Group
provided 47% of total sales; the Farm Equipment Group, 16% of total sales; and
the Fluid Controls and Construction Products Group, 37% of sales. The
Electronics Group reported strong improvement compared with the prior year
with a 30% sales increase and a 14% pretax increase. The Farm Equipment
Group, with the discontinuation of Du-Al's operations during September 1993, had
an 8% decrease in sales and an 11% decrease in pretax (excluding gain on sale
of Du-Al) compared to the very strong performance last year. The sales and
pretax earnings of the Fluid Controls and Construction Products Group
increased 17% and 18%, respectively, compared with the prior year's first
quarter, primarily due to improved performance of its valve and strainer
products.
Overall gross profit margins on net sales for the first quarter of
fiscal 1994 decreased to 29.1% from 31.6% last year. This decrease was caused
by this year's higher sales at the Company's mechanical contracting unit which
had no margin contribution as the added sales involved pass-through material
costs. Excluding the operations of the mechanical contracting unit the gross
profit margin improved over the prior year.
Selling, general and administrative expenses decreased to 18.9% of sales
from 20.6% in the prior year's first quarter as a result of focused cost
reduction programs. Interest expense declined 17% in this year's first
quarter compared with last year primarily due to reduced borrowings. Other
income for the quarter ended November 30, 1993 includes the $1,475,000 gain
related to the sale of the Company's Du-Al division.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1993, the Company increased its cash
and short-term investments $9,501,000. The sources of this increase were
$5,939,000 from operating activities and $5,898,000 from the sale of the
Company's Du-Al division.
At November 30, 1993, the Company had working capital of $84,449,000
with a current ratio of 4.5 to 1 compared to working capital of $81,007,000
and a current ratio of 3.9 to 1 at the beginning of the fiscal year. The
improved current ratio reflects the Company's profitable operations and the
sale of the Company's Du-Al division.
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The Company's internal sources of funds are supplemented with unsecured
bank credit facilities totaling $15 million (nothing outstanding at
November 30, 1993). Management believes sufficient additional credit is
available from banks and other sources should the need arise. Management also
believes the Company's cash flow is more than sufficient to meet payments on
maturing debt, capital expenditures and dividends.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Stockholders' equity amounted to $73,293,000 or $7.48 per share at
November 30, 1993, with total capital employed (total debt and equity)
amounting to $122 million consisting of 40% debt and 60% equity. At the
Company's current quarterly dividend rate of $.06 per share, annual dividend
payments would approximate $2,350,000. Under the Company's debt agreements
with insurance companies, retained earnings of approximately $16 million are
available for dividends, subject to future earnings levels.
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PART II - OTHER INFORMATION
Items 1 through 5 of Part II are omitted because they are not applicable
or because they are not required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) There were no reports on Form 8-K filed for the three months
ended November 30, 1993.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORE INDUSTRIES INC
(Registrant)
/s/ Raymond H. Steben, Jr.
Date: January 10, 1994 Raymond H. Steben, Jr.
Vice President-Finance
and Chief Financial
Officer
/s/ Thomas G. Hooper
Date: January 10, 1994 Thomas G. Hooper
Treasurer and Controller
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